Long-Term Care Insurance
Long-term care is a range of medical and social services. The term refers to a variety of care situations, such as in home care to custodial care to skilled nursing care. It may be provided in the person’s home, at an assisted living center, in the nursing home or at an adult daycare center.
Medicare and standard medical supplement insurance do not cover long-term care. So some individuals purchase long-term care insurance to help pay for the cost of care should they need it. The first step is determining if the insurance is appropriate for your situation. No two policies are the same and several factors affect your cost and coverage. The Senior Health Insurance Information Program (SHIIP) has resources available to guide your decision making. Call 1-800-351-4664 or visit https://shiip.iowa.gov/ and view Iowa’s Guide to Long-Term Care Insurance.
Facility Care
Nursing home care is care received in a facility that is appropriately licensed by the state. Check the definition in the policy to determine the types of facilities covered. Policies sold in Iowa with nursing home coverage must cover all levels of nursing home care. Assisted living facilities are not considered nursing homes so do not assume a policy that covers nursing home care will pay for assisted living. Iowa’s assisted living programs must be certified. An assisted living program will generally not keep a person who needs substantial assistance with several activities of daily living.
Home and Community-Based Care
- Home health care is care received in your home. Skilled care, therapy and services from a home health aide may be covered. Most policies pay for only a few hours of home care a day.
- Respite care provides a break for caregivers in the home. This short-term benefit usually covers one to two weeks a year. Some policies require the family member needing care to be placed in a respite facility to collect benefits while others pay a person to come into the home.
- Adult day care provides assistance during the day to people living in the community.
- Homemaker/chore services can include cooking, shopping, cleaning or assistance with other activities.
- Hospice care is special care for those who are terminally ill. A question to ask is what services are covered and are they covered in home or in a facility?
- Alternate care is care for services not otherwise described in the policy, like safety equipment or home modification.
Levels of Services
- Skilled level means skilled services are provided on a daily basis such as therapy. Usually skilled care is short term and most residents in a nursing home are not skilled level of care.
- Intermediate level of care requires daily nursing supervision by a registered nurse. Some skilled services may be required but not on a daily basis.
- Custodial level of care includes help with activities of daily living such as bathing, dressing, eating, toileting, and moving from bed to chair. This is the level of care for entering a nursing home.
Medicaid is a state and federal aid program that can pay for all or part of long-term care costs. However, to receive Medicaid assistance, a person must meet federal guidelines for income and assets. Many persons who begin paying for nursing home care out of their own pockets spend down their financial resources until they become eligible for Medicaid. Medicaid may then pay all or part of their nursing home expenses. Contact your local Department of Health and Human Services (HHS) office to learn about Medicaid eligibility.
Considerations
Many insurance providers have developed long-term care insurance policies. Before you sign the policy and a check to cover the annual premium, consider several things, including your health, where you want to receive long-term care, your financial situation—a fixed or fluctuating income, and assets such as real property (land, house or condominium).
Long-term care policies can help pay the bills if you need to be in a nursing facility, or if you need care in your own home or in an assisted living center. These policies are designed to protect persons who need care for relatively long periods, such as a year or more.
Not everyone should buy a long-term care insurance policy. While a long-term care policy is an affordable form of insurance for some, premiums can range from a few thousand dollars to several thousand dollars a year. For others, the cost of the insurance premium is too much, and the insurance benefits they can afford are insufficient to pay for the long-term care they may require in the future. Be sure you ask when or if the cost of the policy premium will increase as you get older. Some policy premiums increase as the policy holder ages, meaning the policy holder could be required to pay a higher premium at a time when he or she is on a fixed income and can least afford it.
If you decide to talk to an insurance agent about a long-term care policy, and before you sign the policy and write the premium check, keep these points in mind:
- Take your time. The decision to buy long-term care insurance is very important and should not be rushed. Do not be pressured into buying a policy. Tell the agent that you will think about it and get back to the agent.
- Talk to your spouse, family members and trusted friends, and take someone with you when you talk to an agent. While you and the agent talk, the person who accompanies you can listen to you and the agent.
- No matter how persuasive or insistent a telemarketer may be, do not buy a long-term care insurance policy over the phone.
- Check with several companies and agents. Be sure to compare benefits, the types of facilities covered, how to qualify for benefits, policy maximums, the exclusions and, of course, the premiums.
- Ask about exclusions. What kind of care does the policy exclude?
- Deal with a local, reliable agent, from an insurance company with an A- or higher rating from A.M. Best.
- If a person you do not know tries to sell insurance to you, ask to see the person's insurance license. Contact the home office of the company the agent represents. The agent should have this telephone number readily available. Ask for the agent’s company’s name, address and phone number. If you use a computer, ask for the company's website.
- Understand the policy. You should receive an “Outline of Coverage” that clearly summarizes the policy. Make sure you know what the policy covers and what it does not.
- Before you switch policies, make sure the new policy is better than your current one. It may be more cost-effective to upgrade your current policy by adding additional benefits than to switch to a policy from another company.
- Do not cancel a policy until you have been accepted by the new insurer and have a policy in your hand. Consider carefully whether you want to drop a policy and purchase another. Long-term care policies sold in Iowa since July 1, 1987, must be guaranteed renewable.
- Complete the application carefully. Before you sign the application, read the health information recorded by the agent. Do not sign the application until all the health information is complete and accurate. If you leave out requested information or there is incorrect information, the insurer could deny coverage for that condition, or cancel your policy.
- Do not pay with cash. Pay by check, money order, or bank draft payable to the insurance company only, not to the agent. Completely fill in the check before presenting it to the agent.
- A policy should be delivered within a reasonable time after application (usually 60 days). If you have not received the policy or had your check returned at that time, contact the company and obtain—in writing—a reason for delay. If problems continue, contact the Iowa Insurance Division, Department of Commerce, phone: 1-800-351-4664 or www.shiip.iowa.gov.
If you have questions about long-term care insurance, there is help available. The Iowa Insurance Division’s Senior Health Insurance Information Program (SHIIP) can help answer your questions about long-term care insurance. SHIIP counselors do not sell insurance or promote specific insurance companies or agents. All services are confidential and free. The Iowa Insurance Division also has available a booklet entitled “Iowa Guide to Long-Term Care Insurance.”